Q2 2022 Blonder Tongue Laboratories Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the Blonder tongue Laboratories' second quarter 2022 earnings call.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
Now my pleasure to turn the floor over to your host Ted Grout, Sir the floor is yours.
Hi.
Good morning, everyone and thank you for joining us this morning, and participating in Blonder tongue Laboratories' second quarter 2022 earnings call I'm, Ted Grout, President and Chief Executive Officer of the company.
As we give our remarks. This morning, we will be discussing certain subjects that will contain forward looking statements.
Managements view of our prospects and evolving trends in the market.
As you know the futures, all but impossible to predict so I caution you that actual results may differ materially from those that may be projected in our comments, we would ask you to refer to our prior SEC filings, including our Form 10-K for the years 2019, 2000, 22021 and are filed.
Form 10, Qs for the four quarters of 2020, the four quarters of 2021.
The first quarter of 2022, and our upcoming second quarter 2022, 10-Q as well.
Each of those filings include additional detailed information concerning factors that could cause actual results to differ from the information we are discussing this morning.
With me today is Eric Skolnik, our Chief Financial Officer, and senior Vice President.
Eric's remarks will follow mine and cover our detailed financial results.
Both of US will also be available to answer questions that you may have during the Q&A session immediately following our prepared remarks.
Okay.
In the second quarter of 2022, Blonder tongue laboratories had a net loss of $1 million $154000.
Due primarily to continued semiconductor supply chain shortages and disruptions and raw material cost increases.
The company continued to work that we have discussed in last quarter's earnings call.
Including further planning for future operating expense reductions and focusing our engineering activities on rapid responses when parts supplies are disrupted or delayed.
Our efforts in engineering resulted in a number of products being able to go back into production within approximately six eight or even 10 weeks of unexpected chipset delivery problems. We've.
We've accomplished those projects by changing our product designs to use semiconductor parts that remain available and designing out parts that are not available in the short term.
Dealing with raw material cost increases we have continued to raise product pricing on impacted product lines, but we also continue to see a time delay in the realization of those price increases as we end up delivering products against backlog that was booked in the past at previous pricing.
The company saw continued healthy demand for our products during Q2 with the strongest demand coming from our Nx G. IP video processing products are clear view, IP, encoders and transcoding and our DOCSIS Cmt's high speed data delivery products.
We were also able to produce our bida indoor broadband amplifier product line again during late Q2 after a long delay due to parts availability.
On the sales and product fronts Blonder tongue laboratories has been taking advantage of the return of in person trade shows where we've been able to demonstrate our new products and technologies recently.
This has included a new version of our clear view IP video encoder that allows large tier one cable operators to create locally produced channels on their network on site at apartment buildings hotels campuses and other small and medium business locations without having to carry that content back to their central offices or national operation centers.
We've also recently began began shipping.
HD SDI video format input function for an xg IP video platform.
It expands the usable market of that product line. Your next few product line to broadcasters television studios and some industrial users such as crew ship such as the cruise ship industry.
As I mentioned last quarter. The demand has remained strong for our clear view IP video transcoding product line.
In the direct TV dealer and distributor networks.
The company's biggest challenges have continued to be those that we've discussed in the last three quarterly earnings calls first managing last minute raw material availability.
<unk> shortages and allocation issues.
While at the same time working to take advantage of growing demand in the marketplace.
Second managing raw materials costs that have put stress on our product gross margins and therefore impacting our operating margins by extension.
We do expect to see some relief in the near future on product gross margins potentially.
Potentially increasing on a few important products, but we do not want to predict any specific larger scale supply chain recovery until we actually see the dynamics and the availability in the parks pricing begin to change across the board.
And which is not which we have not seen happened yet.
Now I would like to pass the call over to Eric Skolnik, Our Chief Financial Officer to cover our detailed financial results Eric.
Thank you Ted.
Our net sales decreased to $104000 or two 4% to $4 million to $134000 for the second quarter of 2022 from $4.338 million for the comparable period in 2021.
Net loss for the three months ended June 32022 was $1 million $154000 or a loss of nine <unk> per share diluted share compared to a net income of $1 million $626000 or <unk> 11 per diluted share for the comparable period in 2021.
The decrease in sales is primarily attributed to a decrease in sales of digital modulation products CPE products in analog modulation products offset by a decrease in sales of DOCSIS data products.
It's going to be offset by an increase in sales of DOCSIS data products and encoder transporter products.
Sales of digital modulation products were 45000, and up $381000 CPE products were zero and $288000 analog modulation products were $138000 and $238000 DOCSIS data products were $686000 and $284000 and then.
<unk> coated products were $2 million $163000 and $1 million $140000 in the second three months of 2022 and 2021, respectively.
The company experienced a reduction in CPE products due to the continued de emphasis of this product line, which the company expects to continue during the remainder of 2022.
The company experienced a reduction in analog modulation products due to the continued market shift away from analog modulation solutions.
The company expects the sales of the analog modulation products to continue to decline during the second half of 2022.
The company experienced an increase in DOCSIS data products due to the pent up demand caused by the pandemic. As these products are used primarily in the hospitality and assisted living environments. The company expects sales of these products may return to more historical levels during the second half of 2022.
The company experienced an increase in uncoated trends coated products as these product lines represent newer products and newer technologies with higher demand from customers.
The company expects sales of these product lines to remain at these levels or increase during the second half of 2022.
Although the company does not expect overall sales to return to pre pandemic levels. During 2022. The company does expect overall sales to be higher during 2022 due to approximately $9 million $783000 of sales backlog at June 32022.
For the six months ended June 32022, net sales decreased $14000 or 2% to $7 million $575000 in 2021 from excuse me from 2022 from the $7 million $599000 from the comparable period in 2021.
Net loss for the six months ended June 32022 was $2.307 million or <unk> 17 cents loss per diluted share compared to net income of $1 million $212000 or <unk> <unk> per diluted share for the comparable period in 2021. The decrease in sales is primarily attributed to a decrease in.
Sales of CPE products analog modulation products and coax distribution products offset by an increase in sales of DOCSIS data products and encoding transcoding products sales of CPE products were $27 and $983000 analog modulation products with $237000 and 408.
$2000 coax distribution products for $620000 and $783000 DOCSIS data products were $1 million $140000 and $308000 and encoder transporter products were $3 million $681000 at three and $3 million.
$7000 in the first six months of 2022 and 2021, respectively.
The company experienced as I mentioned earlier, a reduction in our CPE products due to continue.
Francis of the product line and as I.
Said earlier, we do expect that to remain the rest of 2022.
We also as I said earlier experienced a reduction in our analog modulation products due to the continued market shifting away from the analog modulation solutions and we do expect the sales of these products to continue to decline in 2022.
We do expect an increase in DOCSIS data products due to the pent up demand caused by the pandemic as these products are used primarily in the hospitality and assisted living environments.
And the company does expect sales of these products to return to more historical levels. During the second half of 2020 to.
The company experienced an increase in uncoated transporter products as I said earlier these products represent newer products and newer technologies with higher demand from customers. We expect the sales of these product lines to remain at these levels or increase during the second half of 2022.
The company's primary sources of liquidity have been this existing cash balances cash generated from operations amounts available under our midcap facility and amounts available under our subordinated loan facility as of June 32022, The company had approximately $3 million $118000 outstanding under the Midcap facility at 389.
Hours of additional availability for borrowing under the midcap facility.
As disclosed in our most recent annual report on Form 10-K.
Company experienced a decline in sales a reduction in working capital a loss from operations net cash used in operating activities in conjunction with liquidity constraints. These factors raise substantial doubt about the company's ability to continue is it going concern.
As of June 32022, the factors still exist accordingly, theres still exists substantial doubt about the company's ability to continue is it going concern that financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classifications of the liabilities that might be necessary should the company be unable to continue wasn't going concern.
Sure.
Now I would like to open up the call to a question and answer session.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question you. Please pickup your handset if listening on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Your first question for today is coming from George Gaspar George Your line is live.
Hi, good morning.
Morning, George.
Just the first question.
Is that what was the reason that the company didn't come out and make a comment after your last year listing and you disappeared from the market.
There was no disclosure or any comment that came forward from the company until this report came out.
This morning.
Can you give me a little insight from your perspective as to why you decided not to say something.
To encourage shareholders to be so.
<unk> that you might be able to pull through this.
So it's a good question.
I think that just based on.
The fact that the board of directors and senior management both.
Unanimously believed that the best thing for our shareholders was to move to the OTC QB.
The reserve the most shareholder value and maximize our prospects for the long run.
We felt like the required.
Filings were sufficient to.
To notify people of that transition.
The cost.
For us to have remained on the on the NYSE American was had a lot of risk the amount of the amount of additional debt and the kinds of deals that we could have done.
Additional investment just didn't it didn't make sense a broader.
Really tremendous amount of risk.
Given that the fundamental problems with the company are coming from at least for the last nine months have been coming from.
<unk>.
Supply chain issues and those are very open ended and we don't have a lot of very firm.
There's nothing we can hang our hat on in terms of data that's coming from the semiconductor industry to say how long. This is going to last how bad it's going to get.
How much more cost increases and shortages.
And quantity allocations are we going to have to suffer through until it's all over.
Because of the open Endedness of this we just felt like this was the right thing to do for everybody, including ourselves everybody in the senior management and the board who are shareholders and our shareholders and just for the overall health of the company. This is by far the right the right thing to do so.
Jay.
Right.
Eric do you have any more comment on that topic, because you're often.
Just like Ted said that we felt that our disclosures with our 8-K filings were sufficient enough. So we didn't want to.
Do anything more from our press release perspective.
I see okay, Alright, and my next question is.
Relates to.
Your need for financing to.
I mean and get moving.
Better.
Arrangement too as a Green Corporation.
I would think that there is.
You should be able to raise some money.
You have some pretty good things going on.
Developments and some of the new.
Revenue streams that you're developing in the last quarter, we saw that and obviously, you're continuing to make progress and some of it looks very positive.
It would seem like there is still reason to.
Keep this company together in that.
And I would thank you.
Should have been able to or can gen.
Generation some additional investment in your company to stabilize it.
Situation can you make any comments about that.
Sure.
As you saw back during.
During the first quarter, we did a press release, saying that the company was opened for <unk>.
Different strategic initiatives those.
That's a wide net.
Investments steps.
Partnerships, if thats all different types of.
<unk>.
Mash ups that we could have with companies both strategic and financially oriented to help the long term prospects of launch on laboratories, we've had a large number of discussions with a large number of both financial and strategic.
Companies since we've made that press release.
Some of those are still ongoing and some of them represent potential opportunities. When we end up with one that we feel is in the best interest of the shareholders and for the long term prospects of the company.
We will move forward with something but for the moment, there's no news on that.
Okay Alright.
The encouraging thing is just even with your comments this morning.
The new the new product developments.
And going forward process. It just looks like there's some capabilities here that could really set this thing in a very positive motion and hopefully.
That can continue to happen going forward here and then it sounded like you're some of your supply.
Problems are.
Now improving for you and hopefully.
Now where we are.
Now getting close to halfway through this quarter.
So I mean could you make any comment about that.
Supply chain situation at this point and if you are continuing to make progress on it.
We are continuing to make progress on it.
Again, I'll stand by the statements that I made earlier in this call as well as in the press release.
We just can't.
If so.
Unpredictable because we're not getting anything we're not getting any kind of firm statements from from the semiconductor industry across the board. So we.
We're taking some wins and we're taking some losses like on a weekly and monthly basis like it is improving with some guys and it's not improving with other people and we're still getting <unk>.
Surprises every every few weeks that chip that were relying on for particular product lines all of a sudden not available we find out with two or three or seven days' notice and we have to scramble to work around it.
So just given that sort of wild west kind of situation, we really are.
As normal trying to remain is cautious in the way, we kind of characterize the situation with you our investors and shareholders and everybody.
What we can say, though is.
That we put in in the <unk>.
Our leases there are a couple of chipsets that are important for a number of product lines that we do see specific improvements in.
We're not seeing improvements across the board with everything, but we're seeing very specific and encouraging improvements on a couple of product lines and a couple of chipsets.
We are going to see slightly higher allocations on some important chipsets at the very end of this year.
And.
We're getting better and better at running our factories more efficiently combined with our engineering.
Really if there was any sort of hero in our company over the last.
Two months three months four months its been our engineering team, who have been able to we've got some organized and and and managed.
It's really their capabilities to the <unk>.
<unk>, where when we get a surprise on a particular chipset. These guys jump into action they find alternative parts and they figure out the most efficient way to get that product back into production and in some cases, we've seen products get back in production and $45 six weeks in it's just unbelievable, we re spin the boards, we'd get a sample boards back we produce.
<unk> and boom.
We're back in production, so they're doing really.
Quite amazing work to work around the current uncertainties in the semiconductor supply chain market. So that's that's been pretty amazing to watch.
And then on the supply chain situation.
Can you give us a thought on what percentage increase you've seen in prices.
Brian change requirement.
If you could.
And how.
How much of how much of your supply chain problem is domestic and how much is coming from the international side can you can you describe that sure sure.
I laughed when you asked that question because here's here's what happens so when you talk about the price increases associated with the mainstream supply, which is big companies big semiconductor companies supplying through standard legitimate big distributors.
That we've seen increases in the <unk>.
20%, 30%, 40%, 50% kind of range, depending on what kind of chip it is.
How widely used in the industry, what kind of technologies used in it thats the kind of rough range, we've seen for mainstream when a part becomes unavailable through the normal mainstream.
Supply chain.
Say a <unk>.
A fabless semiconductor company cash all of a sudden can't get the wafer the wafers that they need out of some.
Some fab facility like for example, like gluten Blake would say global foundries decides they're going to give more wafers this quarter or this half two.
Somebody else right. So one of our suppliers with a big brand name doesn't get the wafers that they expected. It all flows downhill from there we get notified that we're not going to get the chips, we would expect in a week or two.
We go to the broker market, which are people that are buying sort of the ex the excess capacity of.
Some some big.
Contract manufacturer May end up with after they've run a big production, while they may end up with some extra chips that theyre not going to use right. So those get sold off to brokers and then we bought from those brokers. So in those cases, when we have to go to the broker market we've seen ridiculous.
Inflation on on parts when you buy them in that situation, we've seen we've seen 500% increases and those parts, 900% increase in those parts of the U.
Take a $5 part and now you have to pay $170 for that park.
That's that's not out of the question but.
But I don't want to I don't want to scare anybody by.
These kinds of numbers because those tend to be.
That's like one part on our product right. It's not it's not that's not what we see across the board. That's the exception and we're doing that just so that we can go get those parts to keep a continuity of production. While we work around the fact that those have either gone unavailable or gone extremely expensive we worked around it we get back into production with the.
The reasonably priced part.
We can find but.
If you are faced with the option of not producing a product versus producing the product with say a.
200 to $300 cost increase while while you work around the problem.
That's obviously the better the better path. So that's the kind of stuff that we've been faced with in terms of international versus domestic almost all of the semiconductors.
Say 90 plus percent are coming from.
Different countries in Asia, It doesn't mean that the companies.
<unk> originated the technology or in Asia, but even even the big.
U S semiconductor companies like Intel they'll produce a certain portion of their products over at TSMC Globalfoundries are the other guys just as over as overflow. So.
We will get an Intel product, but it was produced in Taiwan for example, right. So it's it really is a global supply chain at this point.
I see.
Okay.
<unk> got so much going for you in here in terms of technology and the.
Obviously, youre, making wonderful progress.
And bringing into the market.
Our broader.
Opportunities for you to build your.
Revenue stream and hopefully that can continue in the coming quarters here and get this back on track because your technology is.
Obviously, you've got good technology in what you're accomplishing and so there should be an odd.
Opportunity for you to keep moving forward. This is a tough hill to climb up and get over but.
You've gotten this far hopefully.
You can get through it and good luck to you guys. We really appreciate your commentary. Thank you. Thank you very much.
Thank you.
Your next question for today is coming from Gregory Irvin Gregory Your line is live.
Good morning, guys.
Good morning, Greg.
Regarding the backlog.
Nearly $10 million.
Is it.
What's your view.
What would you say is the.
The percentage that you can work down by the end of the year.
Don't have that number off the top of my head I think an easier.
Thing to say is that.
Of that backlog, we're very confident that about approximately $9 million of that can be.
Is incredibly highly confident to be shipped over the course of the next 11 or 12 months.
So that's that is an analysis that was done recently that I have on the top of my head.
Certainly certainly much more than half of that is shippable this calendar year.
But it all figures into when are we going to get the parts to produce those products and in what quantity.
All of that so.
It's down to the bottom line.
Parts availability.
Yes.
Oh.
Could you give me a handle on the percentage of that.
Dollar amount.
That is.
Raised prices how.
How much of the backlog is in there.
Adjusted adjusted and raised prices.
So everything in our current backlog is.
Is that pricing that is higher than what our pricing was in 2021.
So we've had we've had a series of price increases on different products as they were affected by specific raw materials increases some of those we did in October November and December last year.
Some were done in January and then again late Q1, and early Q2 and more late Q2, and then more just recently so there's a scattering. So I can tell you confidently everything on the backlog that was in that.
That that chunk that we're highly confident we're going to ship over the next 11 or 12 months that's all.
Had some levels of price increases that were in place by the early part of this year.
How how it further breaks down into.
Backlog that's associated with the most recent price increases I can't tell you off the top of my head, but you can imagine it's sort of a curve.
Right.
What the reason I ask that is.
I would I would hope that the gross margins are pretty much bottoming out.
And.
If the prices.
Oh.
Prices in that backlog.
Our more recent.
Contract.
That would.
It seems to me that would obviously mean gross margins have a chance to.
<unk> may be significantly.
That's certainly our hope as well of course, the counterpoint to that is if we do have to sustain additional price increases then of course that works against us and we continue with.
Headwinds in that area, even even recently, but but yes.
Things are getting more stable than they were six months ago.
On that front, but we are still continuing to face some challenges in.
We're just working them as they come come to US we're working them one by one.
Eric.
What what was the cash flow from operations this quarter.
Okay.
Great question, So we had a cash flow.
We we used.
$1.450 million this quarter and operating activities.
That's the cash flows from operations.
Correct.
Right.
The current headcount.
Okay.
The current head count is approximately 75 I would think.
Yeah, that's about right plus or minus one.
Okay.
CTO Mr Ontario.
Yeah.
Okay.
Remain on furlough or the back end.
Okay.
He is currently still on furlough.
Do you expect that.
Last much longer.
We expect that to last until we have the.
Liquidity and the financial stability in the company to to reverse that so if that happens.
It happens quicker that'll change quicker if it takes longer.
It'll take longer.
But despite this furlough from what you said the engineering Department is pretty much performed miracles.
They have done some miracles for sure yes.
Not the structure you would want to lump them when the company long term, but it's.
They are.
You can imagine these guys.
Most of them have been with the company for a very very long time. So they are very seasoned.
People are very very high skilled people.
How much of our manufacturing now, especially since analog being phased out.
<unk> in China.
All of the most.
All of the all of our highest technology products, including our <unk>, our clear view product lines are Drake product lines are all produced in New Jersey.
There were a few product lines, we do have produced for us in China they represent.
Probably something in the 10% of our product lines.
It's not it's not the bulk of our company the large bulk of the Companys products produced in New Jersey.
And our own factory.
And.
Couple of other questions.
Our standing with Midcap, which as we've talked about last call, it's going to be we're either going to renegotiate with them.
Something new.
Or look elsewhere.
Whats your general outlook on.
Continued financing debt financing.
Well, we're still working it and when we have something to report obviously won't be able to report.
And finally.
I hate to even ask this but.
Hi.
The viability.
Given the precariousness.
Negative.
Working cap.
The viability.
From an issue with any any other customers.
Okay.
We have not had a single customer.
To my knowledge raise.
That issue with us at all we're not seeing that as well.
As a big impediment at all.
I would hope not.
Yes.
Yeah.
On shaky ground.
As we're all aware for the last.
Nearly a year.
Greg I do want to clarify the comment I just made so we have had some discussions with a couple of our distributors about our status. There have been a couple of our of our distributors that have raised a few months ago. For example, whats going on with Blonder tongue, how are things going especially mostly.
Mostly in the movement from the NYSE American to the OTC QB as our as our exchange.
That prompted some discussions but there is no there is no customer of ours or distributor or dealer that have have stopped doing business or or or or even talking about stopping doing business with us.
There have been some conversations just about.
People asking the same questions as you effectively Greg.
I would presume.
Anyway.
I appreciate George's optimism.
I would like to.
But.
It's rather dicey and it looks like it's.
We don't know how this is going to play out, but hopefully we're going to be in the game and growing some months into.
And for the future.
Yes.
Yes, thanks for your time.
Thank you Greg.
Your next question for today is coming from Dave Pool, Dave Your line is live.
Hi.
Hello.
Okay.
I had two questions.
Kind of along the same lines of server sales, but.
Yeah, one which.
Probably somewhat answered.
Wondering if you had everything that you needed.
Along the supply chain.
Would you be able to.
The demand and fulfill backlog and.
How much would you expect to see.
And income increase from that.
And also what capacity are you working on right now as far as production I guess, 10% 90%.
Something like that.
Do you have those numbers.
Let me answer the first question first.
If we had everything we needed in supply chain.
We would be running our factories more efficiently in the sense that we could be running larger blocks of the same product before we switched over what we've been having to do because we have limited quantities of specific types of chipsets will run a small batch then switched to a small batch of different products.
Switched a small bedroom. So that's that's one of the main.
Inefficiencies, we've been battling over the last few months.
Last six or six to nine months actually.
That's been causing some some of the problems along with the other things we've already discussed so if we had everything we needed we'd be running.
Factoring more efficiently we'd be producing a.
A much higher quantity of product.
And we'd probably be at least in the very short term.
We could be doing.
Something we could probably be doing 25% more per month than we than we're doing now in the short term and that would that would run for a number of months and I think and this is just a supposition on my part the fact that we'd be.
More confidently producing quantity, we see our customers respond by directing more business towards us because one of the things Thats dragged.
US as people.
Having to wait a number of months for product.
If they didn't have that situation, we'd likely be having even more demand and we've got right now on some some types of product lines. So.
I don't want to speculate on exactly the specific numbers, we could be doing but we could certainly be doing quite a bit more with the same team and the same equipment in our factories than we're doing now.
Again, I don't want to I don't want to answer your other question the factories running.
In terms of a staffing perspective, we're running.
Close to 90% to 100% right now, but because we're having to run small batches. That's just.
A less efficient way to run a factory than what you'd like to do.
What could we be producing with with all the parts we need it I think I just answered that question.
Quite a bit more than we're doing now, but I don't want to be pegged down to a particular number because I think there's a lot of different variables in that equation.
I think I think that answered both questions, maybe not as detailed as you'd like.
Yeah, well I know, there's a lot of variables and.
I'm just curious if demand doubled.
At 90% right now.
And it sounds like it's not an easy or an overnight cutover. When you go from one product to another so you have downtime, but that no no but for example, I mean.
In that scenario, if demand really did double.
What we'd be looking at in which which actually was just recently analyzed was.
Internally was what would it take for us to support a higher demand on products. If we have the parts and we'd be looking at some new new auto and certain machinery that would increase our our capacity with a very similar.
Staffing levels that we have today, so that's not out of the question support with some machinery.
So it's not it's not necessarily so much of a labor.
Labor is not really the main constraint here, it's a combination of the way that you run the different batch sizes, coupled with the equipment that we have right now our equipment is not the main bottleneck its parts.
But.
But you can imagine if we had much higher demand and we could have every part that we wanted to get and we got them when we needed them.
We could easily be doing twice the business that we have today I'm not saying that that's going to happen I'm, just saying youre playing out your your hypothetical situations.
Situations right.
Okay.
And also I was wondering why.
It seems like.
Yes, I mean some companies.
Put out more news about what's.
Whats happening with the business than others.
And longer term it seems to be.
Playing it close to the vest and.
So just in Florida.
Okay.
Disclosure or.
Earnings Conference call.
Once in a while I see about new product.
I think investors like to kind of know what's going on through the quarter.
Some more information that makes them feel more comfortable.
And.
I didn't know if this is part of our strategy.
I don't know if you want to get into it.
But I.
I think I think the company has had a long history of just playing a more conservative.
Tack on these things we don't want to provide optimism when we don't have.
All the ducks in a row and everything buttoned up and when when purchase orders are in hand, and we know we can produce everything associated with those and that yields.
And the increase or an improvement in our business, we would be very happy to press release that what we don't want to do is speculate and we've got a.
Kind of a culture in the company that's been led by a combination of our board of directors, our management and our legal to just play the most conservative angle, we don't want to speculate we don't want to provide.
Provide optimism if theres still variables that could change in that equation. So.
Okay.
Sure.
Also I was wondering.
So the OTC to B C.
Does that the insolvency Bulletin board or <unk>.
Oh, no I should've looked it up before before this Oh no no not at all not at all.
As a company companies go public and only go.
Other than going on.
The other exchanges they simply have decided that in the cost of maintaining a public status is more efficient from a cost perspective by being on on an OTC.
Exchange so.
Eric do you want to comment more on that.
That's fair yes.
Yes, I know its cost on the NYSE American is quite a bit.
Yes.
Even the regular.
Zach.
And it's not just the exchange costs, it's also legal accounting.
There's like a lot of different little things that add up.
The house.
<unk> exactly.
Okay.
And I think.
My last question is.
On the debt.
What would you say the average interest is and is it six or.
What does it turn on for your yes.
Yes of course, yes sure. So no. It is it is variable right now it is pegged to LIBOR.
And at June 30th.
The rate was approximately.
Let's see.
So looking it up real quick.
It was about 636% that's the standard.
Interest rate that we're paying at that moment in time, obviously as rates fluctuate.
It will fluctuate as well and Thats just the regular let's call it the core interest as other.
Interest and fees that exist as a result of the various types of deals that we've done under the line of credit for example.
The over advance that we have we pay extra interest on that et cetera, et cetera. So it's a little difficult to get an actual effective interest rate, but it's probably in the eight 9% right now is what we're paying.
Okay, so as the fed moves.
Your.
Rates will change that.
That is correct on LIBOR.
Yes, Sir.
And do you see any yet.
Adverse effects from that.
Just well.
Adverse effects, obviously it in the sense that we will be paying more interest, but so.
So far we've been able to accommodate the changes in the interest rates under our facility without a significant issue.
Okay.
Thank you I'm done.
Thank you. Thank you for your question. Thank you Dave.
Once again, if there are any questions or comments. Please press star one on your phone at this time.
There are no further questions in queue I would now like to turn the floor over to Ted for any closing remarks.
Thank you.
I would like to thank everybody for attending Blonder tongue Laboratories' second quarter 2022 earnings call and for all your questions. Today. Thank you very much and goodbye.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.